US factory output falls 0.4%, manufacturing plummets

Washington, June 15: Factory production fell more than forecast in May, reflecting declining output of vehicles and business equipment that show US manufacturing is still hobbled by weak global demand.

The 0.4% decrease in output followed a revised 0.2% advance in April, data from the Federal Reserve showed on Wednesday. Total industrial production also fell 0.4%.

American producers are still battling the fallout from the plunge in energy prices that has sapped the appetite for investment, while a strong dollar and lackluster global growth have weighed on exports. Manufacturers could find some relief as companies have trimmed stockpiles, leaving them with fewer goods on hand should consumer spending continue to climb.

“The broad story going forward is probably more dragging along the bottom rather than a steep rebound at this point,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. At the same time, there was a “pretty sharp decline in auto production, which tends to be one of the more volatile categories. So that’s a little less worrying.”

Manufacturing output, which accounts for about 12% of the economy, was projected to fall 0.1% last month after a previously reported 0.3% advance, according to the Bloomberg survey median. Total industrial production was forecast to drop 0.2%.

Factory production of motor vehicles and parts decreased 4.2%, the most since January 2014.

Excluding autos and parts, manufacturing output declined 0.1%. Bloomberg